Oil prices rose to their highest level in seven weeks on Wednesday due to progress in trade talks between the US and China and increasing uncertainty surrounding US-Iran nuclear negotiations.
- Brent crude oil futures rose 82 cents to $67.69 a barrel (1.2%),
- US WTI (West Texas Intermediate) oil rose 96 cents to $65.94 (1.5%) reached.
(Prices as of 10:28 GMT.)
Markets were supported by news that the US and China agreed on a trade framework following two days of intense negotiations in London. This framework aims to resolve China’s restrictions on exports of rare earth elements and magnets. U.S. Commerce Secretary Howard Lutnick announced the agreement on Tuesday.
The agreement between the U.S. and China, the world’s two largest economies and biggest oil consumers, reduces downside risks to oil demand, but analysts emphasize that the overall market reaction remains cautious.
“Trade-related risks have temporarily disappeared, but the effects on global economic growth and oil demand are still uncertain,” said Tamas Varga, a PVM Oil analyst.
Tensions with Iran Support Prices
Geopolitical tensions are also pushing prices up. President Donald Trump said in an interview published Wednesday that he is increasingly skeptical that Iran will not agree to stop uranium enrichment. Iran, on the other hand, threatened to target US military bases in the Middle East if the negotiations collapse.
Supply Front: OPEC+ Increases Production
The OPEC+ alliance is planning a 411,000 barrels per day increase in production in July. This means that production cuts made during the pandemic are being gradually reduced for the fourth consecutive month.“Strong domestic demand, particularly in OPEC+ countries like Saudi Arabia, could offset the additional supply and continue to support prices,” wrote Hamad Hussain, a Capital Economics analyst.
US Inventory Data Expected
Later in the day, investors, The focus will be on the weekly inventory report to be released by the US Energy Information Administration (EIA). According to preliminary data from the American Petroleum Institute (API) released on Tuesday, US crude oil inventories decreased by 370,000 barrels last week.
